Key Takeaways

  • LLC formation involves both one-time and ongoing state fees.
  • The one-time state filing fee to form an LLC varies widely by state (from $35 to $500).
  • Ongoing costs may include annual report fees, franchise taxes, and registered agent fees.
  • “Is LLC a one time fee?” — forming an LLC requires a one-time fee, but ongoing fees are required to maintain good standing.
  • States like California, New York, and Massachusetts have among the highest recurring LLC fees.
  • Failing to pay ongoing fees can result in penalties or dissolution of the LLC.
    State LLC fees typically include registration fees, state filing fees, and service fees. Ongoing fees — usually due every year — include reporting fees and franchise taxes. These fees vary from state to state.

LLC Formation Costs

When you form an LLC, expect to pay fees for the following:

  • State filing: You must file Articles of Organization with your Secretary of State office. Each state has its own filing fees, so your cost is determined by the state in which you file. Normally, LLC filing fees range from $50 - $800.
  • Business name registration: You'll reserve an LLC name with your Secretary of State. Most states conduct a business name search to see if the name is already in use. Your registration won't be accepted if your LLC name is already registered by another business. You'll then have to refile for another name and pay another filing fee, so it's best to check the availability of an LLC name before you submit your filing.
  • Services: Along with filing fees, you might opt to pay for services from a legal professional to help form your business. It can cost anywhere from $490 to $790 to have a business lawyer do the work for you, depending on the number of owners your LLC has as well as its complexity.

Ongoing Costs

There are also some ongoing fees you'll have to pay to keep your LLC up and running. You have less paperwork compared to a corporation, but you must still pay annual filing fees to the state. These fees can be high, depending on your jurisdiction. Your state can change the fees any time, and some increase fees in order to raise more money.

Common ongoing costs include the following:

  • Franchise tax: Your business profits won't be taxed directly in most cases, but some states impose a yearly flat tax on all LLCs. It ranges from a relatively low $250 in Delaware to the pricier $800 (minimum) in California.
  • Reporting fees: Most states require you to pay annual fees, or reporting fees, in order to keep your LLC running. In a state like New York, fees increase based on the number of partners your LLC has, and range from $325 to a max of $10,000. The reporting fee in other states can be much lower, with some being as low as $20. Reporting fees are on top of franchise taxes.
  • Time and effort: While the amount of time and attention you'll put into your business can't be calculated in monetary terms, this isn't at all a negligible amount.

If you fail to stay compliant with your state's LLC requirements, you may find that you don't have the asset protection you need when it's most important.

LLC Fees by State

The filing fee to register your LLC is a one-time fee, while the annual fee is ongoing and paid to keep your business in compliance and good standing with the state. You typically pay an annual fee every one or two years, and it's a requirement, regardless of your business's activity or income. Whether you pay every year or every two years depends on your state.

If you fail to pay your annual fee, most states can shut down, or dissolve, your business. The average annual fee is $101.

While most states call their yearly report an “annual report,” it may be known by other terms, such as the following:

  • Annual registration fee
  • Annual certificate
  • Periodic report
  • Franchise tax report
  • Biennial statement
  • Business privilege tax return

While it may seem like a good idea to form your LLC in a state that has lower fees, this isn't always the best way to go about it. In the long run, it could actually cost you more money. You might end up doing business in your state illegally and then having to register two LLCs — one domestic, for your home state, and one foreign, for the outside state.

It's very important to stay current with your business's fees to avoid costly penalties and the possibility of having your business dissolved. You might consider having one person in your business (or your registered agent) keep track of a fee schedule so your LLC remains compliant.

What States Have the Highest and Lowest LLC Fees?

LLC filing and maintenance fees can vary dramatically depending on your state. For example:

  • Highest Initial Filing Fees:
    • Massachusetts: $500
    • Tennessee: $300 (minimum, based on members)
    • Texas: $300
  • Lowest Initial Filing Fees:
    • Kentucky and Arkansas: $40
    • Arizona: $50
    • Mississippi: $50

Beyond the one-time fee, states also differ in their annual or biennial LLC maintenance costs:

  • High Annual Fees:
    • California: $800 minimum annual franchise tax
    • New York: $325–$10,000 (based on income)
    • Massachusetts: $500 annual report
  • Low or No Annual Fees:
    • Arizona and Ohio: No annual reporting requirement
    • Indiana: $30 biennial report
    • Minnesota: No annual fee for domestic LLCs

Choosing a state based solely on low fees can backfire if you live elsewhere and must register as a foreign LLC — incurring fees in both states.

Are There Hidden or Optional LLC Costs?

In addition to required filing and maintenance fees, you might encounter other costs when forming or operating an LLC:

  • Registered Agent Fees: If you hire a third-party agent, this may cost $100–$300/year.
  • Operating Agreement Drafting: While not required by all states, having one prepared by an attorney may cost $200–$1,000.
  • Publication Fees: Required in some states (e.g., New York), publication costs can range from $40 to over $1,000 depending on the county.
  • Certified Copies and Certificates of Good Standing: These optional documents may be needed for banking or foreign registration and often cost $10–$50.
  • Business Licenses: Depending on your city and industry, you may need to apply for a business license with separate fees.

These costs are not “one-time” and should be factored into your ongoing budget for compliance and operations.

Is LLC a One Time Fee or Recurring?

Forming an LLC requires a one-time state filing fee to establish your business, but it is not the only cost you’ll face. To keep your LLC in good standing, you must pay recurring fees, typically on an annual or biennial basis. These include:

  • Annual Report Fees
  • Franchise Taxes
  • Renewal of Business Licenses

Some states combine these into a single report, while others charge separately. If you fail to pay these fees, your LLC can be suspended or administratively dissolved by the state.

So while the filing fee is a one-time cost, an LLC is not a one-time fee overall — ongoing costs are necessary for legal operation.

Frequently Asked Questions

  1. 1. Is an LLC just a one-time fee?
    No. While forming an LLC involves a one-time filing fee, you must pay annual or biennial fees to keep your business compliant.
  2. 2. How much does it cost to start an LLC?
    The cost ranges from $35 to $500, depending on the state. Additional costs may include registered agent services, name reservations, and legal help.
  3. 3. What happens if I don’t pay my LLC’s annual fee?
    Most states will dissolve your LLC or mark it as inactive. This removes liability protections and can result in late fees or penalties.
  4. 4. Can I form an LLC in a cheaper state than where I live?
    You can, but you may still need to register your LLC in your home state as a foreign entity, resulting in double fees and compliance requirements.
  5. 5. Are there any free options for forming an LLC?
    Some states have waived or reduced fees temporarily, and some nonprofits or veteran-owned businesses may qualify for waivers. However, most LLCs will still incur some cost.

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